How to use a cash back credit card to earn more cash and rewards
Although some criticism has lately been leveled at such reward schemes and how they really benefit the customer, there are ways in which you can ensure that you use your benefits optimally. These would include using your card on a regular basis, investing the cash back you receive instead of using it, choosing cards which combine rewards benefits with better interest and annual fees structures. Lastly it makes sense to not spend so much on your cash back credit card that the interest payable on your balance exceeds your benefits.
How to Benefit From Your Cash Back Card More Effectively
With over 14 million credit cards in circulation in Australia today, customers have a wide variety to choose from, from interest rates and fees to perks, condition and benefits. These benefits are usually cash back rewards, Frequent Flyer miles or points which can be redeemed on shopping, travel and services. Some rewards programs also offer insurance on items you purchase and also travel insurance. Criticism has been leveled against reward schemes lately, but with some thought and research, you can maximise your benefits from your own cash back credit card and reward scheme.
Here Are Some Ways to Use Your Cash Back Credit Card Effectively
1. Regularly use your cash back credit card
When you use your card for everyday purchases or for fuel, benefits can quickly add up. But keep track of your spending to ensure that you don’t exceed the limit of the cash back allowed by your provider. Some credit card providers also offer cash back in the form of rebates when you go shopping. Double points can be earned if your card is sponsored by large businesses, and these can be exchanged for bonuses to buy gifts or items with for you and your family. Check the affiliate company your card is linked to so that you can ensure that you will actually be able to use the rewards and check the date before which you are supposed to use the points earned. You can also use your cash back credit card to pay bills and so earn more points.
2. Don’t spend the rewards, rather invest them
Some reward programs, will automatically invest any cash back owed to you on your cash back credit card into investment or retirement accounts. This is a great way to save more as you will also earn interest on the money, but this should not be the only money you put into a savings account.
3. Choose a cash back credit card which combines cash back with other bonuses and benefits
Double reward points for the first couple of months, zero or very low annual fees, low interest rate, free enrollment into the rewards program, no capping and other such promotional offers should all be considered when choosing the card with the right fit for your purposes. If you shop often and also for larger purchases, you will benefit from more points earned as well as lower interest payable for the whole year. This way you are better off every time.
4. Be careful not to spend too much on your cash back credit card
You have to spend enough each year to offset the annual fee you are being charged. At the same time if you spend too much, and your card provider has capped the amount of cash back you are eligible to receive from your card, any expenditure over that limit will be negated by the amount of interest you will have to pay on that amount. Spend only that which you can to pay your credit card back in full at the end of each month. It makes excellent sense to know your balance owed on your card, and be aware of all costs, fees, charges and interest you are liable for on your cash back credit card.